New Studies in Global IT and Business Service Outsourcing

Many multinational enterprises apply multisourcing approaches and both practitioner-related and scholarly literature has identified multisourcing as an emerging key strategy. Multisourcing is described as the blending of services from multiple company-internal and company-external suppliers. Despite its relevance, current literature lacks depth in terms of implementing multisourcing and only a few articles describe multisourcing strategies in detail. Especially, multisourcing in a group-context is scarcely covered. This research study contributes to the body of knowledge by analyzing the case of a worldwide leading financial services provider. This article describes mechanisms that support the implementation of a global multisourcing strategy at a business group with a federal IT organization and provides insights into a real-life example of global multisourcing. Propositions on governance aspects for multisourcing are derived and a split of activities between the group center and the business entities is suggested. In particular, the organizational setup of a business group – with the numerous business entities and the federal governance model – determines the multisourcing strategy and the split of activities. Hence, this research also helps practitioners facing similar challenges.

Companies and their business processes are subject to many regulations. Today’s business processes are widely supported by IT systems. Therefore these systems play an im portant role in assuring compliance. The need to assure compliance can influence IT out sourcing decisions. We summarize some frameworks that give recommendations on assuring compliance of outsourced activities.

For a service provider with many globally acting customers similar audit activities of many auditors would be time-consuming and expensive. To avoid these costs, the American Institute of Certified Public Accountants (AICPA) suggested that an auditor may provide a SAS 70 Audit Report Type II which confirms the existence and effectiveness of internal con trols. Recently, the AICPA replaced the SAS 70 with the attestation standard SSAE 16. Based on frameworks and guidelines we discuss compliance issues in special cases of outsourcing relationships such as Subcontracting and Cloud Computing.

In recent years scholars have discussed the relationship between contractual and relational governance in information systems (IS) outsourcing. Findings regarding this relationship are still mixed. Some hint at a substitutional relationship, others at a complementary relationship. Moreover novel investigations favor another argument: relational and contractual governance mechanisms can simultaneously be complements and substitutes.

If governance mechanisms can be both, substitutes and complements, the question arises whether the relationship between different types of governance mechanisms is the outcome of distinct processes of interaction. To answer this question we conducted an exploratory, multiple-case study of five IS outsourcing projects at a leading global bank. We identified four archetypical interaction processes (archetypes): Three archetypes yield complementary relationships, one yields a substitutional relationship. Based on these findings, we searched for patterns in the occurrence of the archetypes as well as for their underlying reasons.

Our analysis revealed three salient patterns in the occurrence of the archetypes, each representing a sequence of archetypes: In the first two patterns sequenced archetypes reinforced each other leading to either a “success” (pattern 1) or “failure path” (pattern 2). Pattern 3 - the “interrupted path” - demonstrates how a success path is broken and turned into a failure path induced by an external stimulating event.

Our major contribution is a shift in perspective. We show that the relationship between governance mechanisms is not static but dynamic. Dynamic interactions between governance mechanisms facilitate or corroborate perceived quality of IS outsourcing governance. Our findings pave the way towards a process-theoretic view on IS outsourcing governance.

Outsourcing of information technology truly started in the early nineties. This market has grown substantially since that time. A substantial part of this market is application management. This publication provides lessons learned based on six case studies. Three historic case studies describe outsourcing engagements in the 1990s, and three recent case studies describe outsourcing engagements in the 2000s. By comparing the two, the transformation of service providers into service integrators becomes clear. This transformation resulted in substantial reductions in the total cost of ownership by investing in retained organization, resulting in an increase of the coordination costs, improved performance and more predictable cost patterns, which in turn resulted in a decrease of the production costs.

Firms’ rationale to outsource parts of their IT function are mainly based on cost reduction. Many vendors applied a high level of standardization in organizing the delivery of IT services to decrease their cost level. Drawing on the Transaction Cost Economics the objective of our study is to examine how environmental uncertainty and asset specificity affect vendors’ functional organizational structure and, in turn, influences ex-post transaction costs. A retrospective view on a case study was investigated from the perspective of a global outsourcing vendor. Our results suggest that the vendor’s functional organizational structure can be considered as a mediator in minimizing the ex-post transaction costs. Executives and managers need to be aware that uncertainty and asset specificity may lead to an increase of the coordination costs. Therefore, vendors need to reassess their organizational structure regularly and implement adjustments to control their ex-post transaction costs.

In the contemporary business environment, Global Outsourcing (GLOS) and global networks are used to achieve strategic and economic advantages, with customer-supplier relationships spanning across not only countries but also continents. In this global context, culture and culture-related issues are factors that affect GLOS relationships and collaboration. Building on areas of existing research, the paper examines literature on culture and IS/IT outsourcing, and focuses on the emergence of culture in a GLOS-specific context. GLOS culture is examined through a cultural systems perspective, which normative research shows to be able to effectively reflect issues of emergence, change, and dynamism. Using an interpretivist qualitative methodology and a thematic analysis of case studies of a customer-supplier automotive network across Europe and Asia, cultural emergence was found to be related to four categories of cultural attributes: ABC (attitudes, behaviors, and cognition), context, interactivity, and regulation. To address cultural emergence, the paper focuses on the analysis of specific mechanisms and processes that play a role towards the emergent GLOS culture. Understanding them through the dimensions of dynamism, scale, and motivation, the paper discusses their role in cultural emergence and discusses benefits for researchers and practitioners.

From a national and global perspective, the sourcing of application systems has significantly matured and been widely adopted over the past years. However, little research has been conducted regarding the properties and contingencies of outsourced technological artifacts. In most scholarly published contributions, it is often difficult to find the IT artifact in the IS sourcing debate. Especially, it has not yet been explored on which rationales certain parts of an IS architecture are handed over to external vendors or kept in-house. In order to overcome this drawback, we focus in this paper on the outsourcing decision for components of IS architectures. This, in turn, directs the focus to the properties of software components and their surrounding contingency factors which may facilitate the decision to outsource a component or not. Thus, the unit of analysis will not be on an organizational or work group level, but rather on the level of a technological artifact itself: the software component which needs to be developed among others in order to achieve the desired system functionality. We are not aware of any research contributions in IS sourcing which have been conducted on a software component level so far. Thus, we aim to contribute towards an underexplored topic which is highly important since organizational decisions towards outsourcing are deeply rooted in the technical functionalities of the desired systems.

Getting agile methods to work in global software development is a potentially rewarding but challenging task. Agile methods are relatively young and still maturing. The application to globally distributed projects is in its early stages. Various guidelines on how to apply and sometimes adapt agile methods have been proposed. However, systematic literature reviews reveal that detailed evaluative studies are scarce and limited to small and medium sized projects. This study presents a framework that integrates best practices of adapting and applying agile methods reported in the literature. The framework is applied to analyze the experiences of global software product development company Cordys in a seven year longitudinal case study. Both the framework and the experiences of Cordys documented in this paper will be of value to other larger projects that aim to be successful in applying agile in globally distributed projects.

Global software development (GSD) is often impeded by global distance which may be geographical, cultural, temporal or linguistic. This results in the requirement for specific strategies to coordinate a range of activities between client and vendor teams in the GSD environment which are different from a collocated setting. GSD literature recommends many coordination strategies, but tends to take the client viewpoint. However, these should also be viewed from the vendor perspective. This paper addresses this gap by presenting coordination strategies which we identified from GSD literature and an empirical research study which we carried out with vendor companies in India. Comparing these coordination strategies with relevant strategies in the human resource management section of the PMBOK® Guide, we have defined a set of strategies which can be used by GSD Project Managers when coordinating a project.

The provision of shared IT services is a process-focused intra-organisational arrangement that serves clients within the larger parent organization, achieving economies of scale through the creation of specialized knowledge centres. Although there is considerable research on shared services with regard to its conceptual underpinnings, implementation strategies and rationales, research is limited on the actual operation and challenges of the model. Given the importance of a services mindset to modern economies, an in-depth investigation of an IT services organisation is timely and will provide useful insights. This paper reports on a particular instance of a shared services centre using the concept of “service competency” developed in the paper. The paper also draws out the commonalities and differences between the provision of shared services and common outsourcing models. The findings demonstrate the complexities of attempting to provide a service orientation where organisational and operational issues obstruct and conflict with these efforts.

The outsourcing industry is now up for a new challenge: to understand how innovation can be realized from outsourcing engagements. While innovation has been explored and prized within businesses for decades, it is a relatively new topic in the context of outsourcing. And, as such, the perceptions regarding what innovation in outsourcing is, what inhibits or enables innovation in outsourcing, and what client firms are willing to do to ensure they benefit from innovation in outsourcing are still being defined.

This paper provides insight into some of the critical aspects in innovation in which both client firms and vendors have taken interest in recent years. We go beyond the simplistic approach we have seen in some recent reports that advocates for the development of trust and close relationships between client firms and vendors as the main enablers of innovation in outsourcing. In our view, innovation in outsourcing can be properly understood only when both contractual and relational aspects are examined as well as the nature of the innovation, i.e. incremental or radical, is explored. Further, we posit that the sourcing model applied has also an impact on the ability to innovate.